Know how online card payments changes will impact you starting January 2022

Come January 2022 and Online Card Payments Slated to Change. Let’s have a look at the expected changes in detail.

What is the meaning of a card token system?

Online shopping portals like Amazon and Flipkart will no longer be permitted to retain customer details such as card information expected to help with faster transactions. Card details will now be replaced with a unique token that is expected to eliminate the need to store card details on various e-commerce portals.

The unique token will be generated in real-time based on a combination of factors such as the card type, the token requester, and the device through which the request has been made.


How does the new card token system work?

Today, while making online card payments, users have to enter their CVV number available on the credit card. This results in the e-commerce websites having complete access to information on a user’s debit or credit card. But now, this is expected to change. E-commerce websites will not be able to store your card information anymore. Instead, a ‘token system will be established to make the payments.

In layman’s terms, with the new card token system:

  • A user does not need to enter their credit card details in the token.
  • A unique alternate number known as ‘token’ will be linked to the user’s credit card. This token will ensure that the user’s card details remain safe.
  • While making online card payments for shopping on any e-commerce website, users will not have to enter their 16-digit credit card number. All they have to do is enter the token number.

The token manager requests customers to create a token for selected card transactions. This gets carried forward to the card network for processing. It is also used for QR Code payments and point-of-sale terminals.


How will the new card token system help?

With the new card token system effective from January 1, 2022, users will not have to share their card details with any third-party sites or apps. Therefore, if you are supposed to, you order food online or book a cab. Currently, you have to provide the card details, and the complete details of the same are saved on the e-commerce website being used. This gives rise to the risk of fraud.

As the card token system will soon replace this mechanism, the risk of fraud is expected to be reduced. Considering token creation will be a one-time effort, it may save time for users who would have otherwise had to enter credit card information to ensure the safety of the transaction.


What are the steps to be followed in token transactions?

Here are the steps that a user has to follow for token transactions from January 2022:

  • The user must initiate a request on the application available from a token requester.
  • As per RBI guidelines, tokenization can be done through mobile phones or tablets. This will include all transactions made through contactless cards and QR codes.
  • When a user attempts a transaction on any of the different digital platforms and wallets, the token providers will request a token, verifying it with the user’s bank.
  • Once the verification of data is done, a unique code gets generated. This cannot be modified and gets irreversibly paired to the user’s device.
  • Users who are making multiple payments through the same device need not worry. All platforms will be able to authorize the payment by sharing the token.
  • This process will also do away with sharing user information each time a new transaction is initiated. It aims to make the process quicker and safer at the same time.
  • Card companies, including Visa and Mastercard, are expected to function as Token Service Providers (TSPs). These companies will be responsible for providing users with the tokens on e-commerce platforms and allowing any mobile payments.

Also Read: Credit Card Bills – Online Payment Methods



Although the changes mentioned earlier regarding online card payments will likely make the process a lot easier, its implementation remains to be seen. This will decide upon the safety factor and the overall efficacy of the process. Needless to say, whenever an online financial transaction is involved, it is best to practice utmost care by checking for the level of safety guaranteed by the platform.

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